Economy, Business And Markets

Testing Indo-Iranian Relations

Testing Indo-Iranian Relations Testing Indo-Iranian Relations

T he Times of India announced in November that it will offer online visa facilities for 45 countries including, the US, Australia, Germany, Japan UAE, Palestine, Jordan, Thailand, Singapore and Russia. The newspaper said the facility would be announced officially on November 27 by the ministry of home affairs and tourism.  The article also stated that countries already allowed visas on arrival include Finland, Japan, Luxembourg, New Zealand, Singapore, Cambodia, Myanmar, Vietnam, the Philippines, Laos and South Korea.  

This long list of countries offered the visa free entry seems disparate at best. Countries like Myanmar and Cambodia have generally poorer economies than that of Iran and the trade between the countries pales in significance compared with that of Iran’s.

So the question that needs to be asked is why Iran is not on the list of the countries offered the quick online visa entry? Another question would be why after deals such as the Chabahar project on Iran’s southern Indian Ocean coast the Indian government persists in such anti-business policies towards a major Asian trade partner?

 Basmati Rice Issue

The reason for the missing Iranian entry on the visa list could be part of a far broader collection of issues. It’s true to say, that in recent years India and Iran have had an on-off relationship at best. One of the recent ‘off periods’ was during the Ahmadinejad administration when India lost a lot of investment in their plans to tie up deals to Central Asia through the initial stages of Chabahar Port’s development. More recently the issue could be something as simple as rice, this staple meal which both countries adore.

CNBC India reported in December that Iran has imposed an import ban on basmati rice from India. The report also added that Iran also barred rice from other countries as its local crop is reported to be good this year (ending March 20, 2015) and is set to arrive in the market there. Tehran’s move may further drag depressed prices of basmati rice in the domestic market.

 Investment Before Politics

Back in October, Mumbai-based drug maker Cipla announced it has signed a new contract to produce generic drugs with its existing Iranian distributor in Iran. The Indian firm’s investment of $37 million in a new pharmaceutical production plant would see the company hold a 75 percent stake in the proposed unit.

Cipla did say it would offer new drug manufacturing equipment in addition to its technical know-how. Prior to that the company announced it acquired a 60 percent stake in an unnamed Sri Lankan-based company for $14 million, which would market its products in that country. It also acquired 51 percent stake in a UAE-based pharmaceutical company which has manufacturing and distribution business in Yemen for $21 million.

 Both Ways

For India to offer a visa waiver program for a host of countries and not Iran suggests that Iran on this side is also being tough on Indian applicants. A quick check at Iran’s diplomatic mission in New Dehli suggests that Indians must go through stringent checks before visiting the Islamic Republic. The average cost of an entry visa to Iran from the New Dehli embassy is roughly $55 at current exchange rates, not expensive, but one which hampers trade relations and travel between the two nations.

 Could Chabahar Change Everything?

Chabahar’s rise to prominence in recent months has been spectacular to say the very least, Indian investment cash floods the once barren port and investors from the sub-continent and beyond are making frequent trips to look at ways to take advantage of future business opportunities.

The future of Chabahar is yet to be decided, but in any case India is likely to have a large impact in terms of trade and presence in the port.

On the last day of 2014, President Hassan Rouhani visited the port city making his comments about developments. In a meeting with provincial governors, Rouhani mentioned that Chabahar, Sistan and Baluchestan, is “the main pathway to free waters as well as Iran’s southeastern gate, Mehr news agency reported.

“Sistan and Baluchestan Province has valuable underground resources, excellent human capabilities, and a strategic geographical position, of which we should take advantage, for the benefit of the province and also of the country,” Rouhani said.

With Iran now beginning its own pivot¬ – towards its north and south partners – along with trying to secure more stable relations in the region as a whole, India’s relations with Iran, due to the advent of joint cooperation in Chabahar, could begin to make more equitable sense to both parties and in turn generate a better longer lasting business relationship for future generations.